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The gold futures contract traded on the Multi Commodity Exchange (MCX) failed to breach the ₹27,000 (per 10 gm) level last week. The contract fell sharply after recording a high of ₹27,192 on Wednesday. It is currently trading just above ₹26,500.
The inability to rally beyond ₹27,000 last week, followed by a sharp fall on Friday, signals a bearish outlook for the MCX-gold futures contract.
Immediate resistance is at ₹26,700 and thereafter a strong resistance at ₹27,000. As long as the contract trades below these resistance levels, a fall to ₹26,100 is likely in the coming week. Traders with a short-term perspective can go short with a stop-loss at ₹26,800 for a target of ₹26,150.
Traders however need to tread with caution while taking short positions as the extent of fall from current levels could be limited. On the global front gold price has important support near $1,180 per ounce. A strong reversal from this level, and a breach of $1,200, can turn the short-term outlook bullish for gold.
Similarly the domestic MCX-gold futures contract is likely to find some support at ₹26,000. A reversal from this level, can take the contract northwards to ₹27,000 or even higher. Also, dollar continues to gain strength against all major currencies. If rupee weakens further, it could limit the downtrend in the MCX-gold.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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